Norway’s Wealth Fund Posts $30 Billion Quarterly Loss as Bond Rout Bites

Norway’s sovereign wealth fund, the world’s largest, reported a loss on its investments in the third quarter, with weakness in its bond portfolio driving the decline.

Norway’s sovereign wealth fund, the world’s largest, reported a third-quarter loss of 278 billion kroner (about $29.7 billion), a return of minus 0.5% on its global investments.

The loss was driven by the fund’s bond holdings, which returned minus 3.5% in the quarter, as higher interest rates pushed down prices. A global bond sell off sent government yields to levels not seen since the financial crisis, amid growing concerns over government debt in the US and the EU.

Deputy CEO Trond Grande of Norges Bank Investment Management (NBIM), which runs the fund, said the overall result was close to flat but slightly negative, with rising rates hurting fixed income.

Other parts of the portfolio held up better. Equities, which make up 72% of the fund, returned 0.5%, while real estate gained 0.4% and renewable energy infrastructure gained 7.5%. Grande said the equity gains were uneven: energy companies rose the most, while rate-sensitive sectors such as utilities and real estate fell.

At the end of September the fund was worth 22,014 billion kroner (roughly €2.09 trillion), with 72.1% in shares and 25.8% in bonds. Its total value fell by 670 billion kroner over the quarter, with a stronger krone adding to the decline, while government inflows of 80 billion kroner after management costs partly offset it. The fund’s value is currently around $2.3 trillion.

The fund invests Norway’s oil and gas revenues, owns on average 1.5% of all listed companies worldwide, and holds stakes in about 7,100 companies, as well as bonds, property and renewable energy projects.

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